Gov. Quinn considers restrictions on payday loans
Springfield, Ill. – Ilinois' latest attempt to rein in payday loans is awaiting the Governor's action.
The measure caps the interest that can be charged for payday loans. Those below $4,000 would be capped at 99 percent. Larger loans would be limited to 36 percent interest.
While several lawmakers say that's still too high, many payday lenders charge several times that amount. Skokie House Democrat Lou Lang said the caps will help.
"We were trapping people in a cycle of debt they could not exit," Lang said. "And with the caps in place here and the other consumer protections in this bill, that will not happen in the future."
Lenders must also base the traditionally short term loans on a borrower's ability to repay.
Consumer advocates have lobbied hard for more restrictions on payday loans.
They say payday lenders focus on low income residents who often are unable to obtain a line of credit through more traditional means.